2017 Economic Calendar
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2-Yr Note Auction  
Released On 10/24/2017 1:00:00 PM For 10/24/2017 1:00:00 PM
Auction Results
Total Amount$26 B 
Coupon Rate1.500% 
Yield Awarded1.596% 

Results are soft for the monthly 2-year note auction, where coverage, at 2.74, was the weakest since March, and the bidding on the sloppy side, pulling up the high yield to the awarded 1.596 percent, about 0.2 basis points above the 1:00 bid. Moderate end investor demand did materialize, however, with non-dealers taking down 62 percent of the $26 billion offering, near the bottom of this year's range but well above the long-term average of 44 percent. Reflecting expectations of a Fed fund rate hike in December and at least one more thereafter, the 1.596 percent high yield was 13.4 basis points above last month's rate and the highest awarded in over 8 years. Please note that although a new 2-year note offering was announced on Thursday October 19 with CUSIP No.9128283A6, the interest rate determined at today's auction matches that of an outstanding 5-year note with the same interest rate and maturity, and in accord with Treasury procedure the issue will thus be considered an additional issue of the outstanding 5-year notes of series AE-2019, with CUSIP No. 912828F62, originally issued October 31, 2014.

Treasury notes are sold at regularly scheduled public auctions. The competitive bids at these auctions determine the interest rate paid on each Treasury note issue. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the notes, resell the notes to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. The 2-year notes are announced around the third week of the month (usually on Thursday) and then auctioned the following week. In all cases, the 2-year notes are issued (settled) on the last day of the month, unless it falls on a weekend or holiday, and then they are issued on the next business day. (Department of the Treasury)  Why Investors Care

Data Source: Haver Analytics
When the 2-year note yield is significantly higher than the federal funds rate, it suggests that bond investors are expecting the federal funds rate to rise. Conversely, when the 2-year note is lower than the fed funds rate, it suggests that investors are anticipating a rate cut -- or at least some stability in policy. The chart shows the high yield awarded at monthly 2-year note auctions since January 2012, up to and including the latest auction results.
Data Source: Haver Analytics

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